Florida Bar v. Dunagan

Brief Fact Summary.

Dunagan represented a married couple in various business transactions, then represented the husband against the wife in a divorce proceeding. Wife sued for malpractice, and Dunagan sought review of a referree’s findings and recommendation against him.

Synopsis of Rule of Law.

A lawyer who has formerly represented a client is prohibited from representing another person in the same or a substantially related matter where that person’s interests are materially adverse to the former client’s interests. This rule may be avoided by obtaining informed consent from the former client.

Facts.

In 1992 Attorney Dunagan prepared a bill of sale purporting to transfer assets of a restaurant, “Biscuits ‘N’ Gravy ‘N’ More” (B&G) to the joint ownership of William and Paula Leucht. Subsequently a commercial lease dispute arose concerning the restaurant. Dunagan represented B&G and the Leuchts in the action and moved to dismiss Paula as an improper party to the suit because he had inadvertently omitted her name on a registration form. Dunagan was also involved in various other negotiations and suits representing B&G and the Leuchts. In 1996 Dunagan sent a letter to the police and city attorney stating that he represented William Leucht, that Leucht was the sole owner of B&G, and that although there as a bill of sale that considered putting the business in the name of William and Paula, it was determined that William would remain the sole owner. It further advised that William intended to fire two employees, and that they would no longer be welcome on the premises of the
restaurant. Several days later Dunagan filed a petition for dissolution of marriage on behalf of William against Paula. A few days later, Paula called B&G restaurant and was told that William was the sole owner and she could not come to the restaurant. She went anyway and was arrested for disorderly conduct and forcibly removed. During this arrest she informed police that she was the co-owner. After these events a divorce proceeding commenced that ordered William and Paula to share equally in the net proceeds of both B&G restaurants. Paula hired an attorney to file a malpractice suit against Dunagan, and he sought review of the referee’s findings and recommendation ruling against him.

Issue.

Did the referee err in finding that Dunagan’s representation of William in the divorce proceeding after having represented the couple in matters relating to their business presented a conflict of interest?

Did the referee err in finding that Paula did not consent to Dunagan’s representation of William?

Did the referee err in concluding that Dunagan’s letters to the police and city attorney violated rule 4-1.9(b)?

Ws the recommended discipline of a ninety-one-day suspension too harsh?

Held.

The findings of the referee where appropriate.
Dunagan argues that the conflict of interest did not exist because the business matters were completely unrelated to the dissolution of the divorce, because ownership of the business was not central to the divorce. This is without merit. Under the Florida Bar, a lawyer who has formerly represented a client is prohibited from representing another person in the same or a substantially related matter where that person’s interests are materially adverse to the former client’s interests. Because the business was begun during the marriage, it was a material asset and was inherently at issue in the divorce. In fact, the petition for dissolution of marriage filed by Dunagan specifically raised the issue of the ownership of the business and impliedly disputed the validity of the bill of sale.

An attorney may be permitted to represent a client despite a conflict of interest if he obtains the consent of the appropriate party. Dunagan claims he sought her consent through her attorney after she retained one. Paula testified that her attorney never clearly advised her of her rights or the possible prejudice Dunagan’s representation of her ex-husband presented. Therefore, her failure to object cannot be construed as consent after consultation. Dunagan claims he could not personally consult with or obtain Paula’s consent after she obtained representation. However, he should have realized that where a conflict exists prior to the beginning of the representation the necessary consent should be obtained before the attorney agrees to represent the conflicting interest.

Florida rules prohibit a lawyer from using information relating to representation of a former client to the former client’s disadvantage unless the information has become generally known. Dunagan claims his letters to the police and the city attorney did not use information to Paula’s disadvantage because it only addressed who had right to sole possession of the premises, and Paula was arrested for disorderly conduct, not trespassing. However, the arrest and forcible removal was at least contributed to by the letters.

The recommended suspension is appropriate based on similar suspensions for similar conduct.

Discussion.

This case provides a description of when an attorney may violate conflict of interest rules by representing a client in a divorce proceeding when the attorney has represented the adverse party in a substantially related matter.